Dell launches dedicated services organization

Dell Services, built on the recently acquired Perot Systems, will focus on midmarket customers

By Joab Jackson, IDG News Service |  Small Business, Dell, IT services

Dell has launched a dedicated services organization, appropriately named Dell Services, that will focus on midmarket enterprise customers. The company formed the unit by integrating Perot Systems, purchased Nov. 3 for US$3.9 billion, with the enterprise services operation from its own Large Enterprise business unit.

"Dell became an IT leader through highly efficient, built-to-order, hardware solutions. Now we want to do the same thing in services, by reducing complexity and driving out inefficiencies across the service and support lifecycle," said Peter Altabef, who is president of the new organization.

The combined units are expected to generate approximately US$7.5 billion in annual revenue for Dell.

In a set of conference calls with press and analysts, Altabef, formerly president of Perot, said the new organization will concentrate primarily on serving midmarket enterprise customers, those who usually proffer service contracts between US$20 million and US$50 million in value. This market was the primary customer-base for both organizations before the acquisition.

"Smaller and medium businesses have been under-served by services organizations," Altabef said. Dell plans to offer services on a more cost-effective "plug-n-play" approach than what is offered by the traditional vendors in this space, namely by increasing automation, offering services on a modular basis, executing tasks at remote, inexpensive locations wherever possible, and relying on standards.

"Many of [the midmarket] customers are not interested in doing business with the really big outsourcing firms, because they feel like they will be lost in the noise," added Steve Schuckenbrock, Dell's president for large enterprise operations. "While a lot of outsourcing companies will talk about the big mega deals and the huge billion-dollar opportunities they continue to pursue, the sweet spot for Dell Services is a contract value of up to $50 million, and terms that range from three- to six-year time frames."

Among the services that the organization will provide include warranties and enhanced support, managed IT services, business process services, IT and business consulting, as well as applications development, maintenance and testing.

During the conferences, Dell executives also entertained questions about how well the infrastructure and personnel of Perot Systems, based in Plano, Texas, were being folded into Dell, roughly 200 miles south in Round Rock, Texas. The combined organization will have 42,000 employees.

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